How to Get the Best Deal on Health Insurance

Health insurance is scary and complicated. What follows are some ideas on how to get the best deal on health insurance.

Step 1

Consider plans that are offered through your employer. If you employer is paying a portion of your group health insurance plan, that might be your best option. When deciding, consider your out-of-pocket premium and deductible costs. Also consider whether they will pay a portion for your family. Often, employer will pay most, if not all, of the premium for the employee, but you have to pay for your entire family. If this is the case, it would be wise to shop around for your family's plan (see the link below for an article describing how to do this.)

Also, find out if your portion of the premiums will be taken from your paycheck on a "pre-tax" basis. This means that you are only taxed on the dollars that you have left after your premiums are deducted. In a nutshell, most people will save 10 to 25 percent through pre-taxing. This means if your share of your health premiums is $400, you will only miss about $300 out of your bottom line.

Remember, in a group health insurance plan, you are helping to pay for the oldest, sickest person in your group. Remember also, that if you are interested in maternity coverage, many individual plans will not cover it without adding an expensive rider.

Step 2

Shop around for individual plans. With the advent of internet insurance brokerages, this step has become almost laughably easy. Click on a link, enter a little bit of personal information, and you can get health insurance quotes for numerous plans and companies.

Step 3

Learn the lingo. After you get the quotes, the real work begins. You have to settle on a plan that best suits your needs. There are numerous types of plans available. HMO's, PPO's, FSA's... It's like really expensive alphabet soup! It's your job to make sure you understand all of it.

Here are a couple if hints:

Co-Pay refers to the amount you have to pay towards your care, per visit. This is the $30 you have to give the doctor when you go in for your sinus infection. Co-Pays typically do not count toward your deductible.

Deductible refers to the amount you have to pay for major things before the insurance kicks in. A $1500 deductible means you will have to pay the first $1500 when you get admitted for your gall bladder.

Co-Insurance is the percentage you have to pay after your deductible. An 80/20 plan means you have to pay 20 percent of the bill after you've met your deductible. There is typically a "max out-of-pocket" after which the co-insurance no longer applies.

Max out-of-pocket is explained above. Think of this as the amount you will be responsible for paying if something big happens.

FSA's are high deductible health plans that allow for a Flexible Spending Account to be set up to cover the deductible. The money you put in an FSA is tax free and subject to federally mandated limits.

Step 4

Look at how you use your health insurance. How often do you go to the doctor? Do you have any family medical history or dangerous hobbies? Are you planning on starting a family? Do you have enough cash in reserve to be able to afford a high deductible plan?

Step 5

After you have settled on a plan, contact the company and ask them as many questions as you can think of. Ask them about the strengths of the plan and the potential pit falls and concerns with this type of plan.

Step 6

Just do it. Look, if you're reading this, you know you need to take some steps to figure this out. Don't wait. Do your research. This is too important a decision to procrastinate with.

Remember, never drop any insurance plan until you have the replacement policy in place.